The US Federal Trade Commission (FTC) announced a $7 million action Tuesday taken against the remote customer service platform Arise Virtual Holdings for misleading potential workers about the amount of money they could make on its platform.
The FTC, which filed its final injunction against Arise in the US District Court for the Southern District of Florida, accuses the company of falsely marketing at home-based job opportunities for major national brands, that would pay an hourly rate of $18.
The company would heavily promote the remote business opportunities online, targeting stay-at-home mothers, and others looking to work from home, almost always recruiting black women, according to the the FTC release.
FTC Chair Lina Khan said that “Arise lured in workers with false promises about what they could earn while requiring them to pay out-of-pocket for essential equipment, training, and other expenses.”
According to the company’s own internal documents, FTC investigators found that from 2019-2022 the average pay for jobs on the Arise platform was just $12/hour.
Investigators say Arise continued to advertise the $18 per hour pay claim even after receiving multiple notices from the FTC to pull the false recruitment ads off the internet.
Furthermore, the court documents show that Arise would force gig workers to fork over hundreds of dollars to purchase or finance work equipment, such as computers and headsets, and in some instances had even charged potential hires as much as $250 for training programs.
Beyond the startup costs, Arise also charges workers on its platform nearly $40 each month in mandatory fees, the FTC stated.
FTC takes action against gig work company Arise Virtual Solutions for deceiving consumers about pay in marketing its business opportunity: https://t.co/CZzY3BBWRB /1
undefined FTC (@FTC) July 2, 2024
The FTC charged the Florida-based company with violating its Business Opportunity Rule, which requires a company to “truthfully disclose the basis for earnings claims to consumers” and for failing “to provide the documents and disclosures required.”
Arise official response to settlement agreement
Arise Virtual Holdings posted an official response on its website Tuesday after the FTC publicly broke the news.
The company said that although they willingly entered into the settlement agreement and cooperated with the FTC during the investigation, “we fully disagree with the agency’s allegations and characterization of the facts.”
“This settlement does not mean that we admit to wrongdoing, or that there was any finding of liability against Arise,” it said.
The company said it stands by the way it conducts its business, but that “the risks and costs associated with litigation made clear that resolving this matter was the best path forward for our business..."
Arise also noted that it is currently in compliance with "key aspects of the order made public today," and said the company plans to do more to improve its business practices in the future.
Additionally, Arise faces separate charges with the US Department of Labor over claims the company misclassified its workers as independent contractors and denied minimum, plus overtime wages to more than 22K workers.
Labor officials call the case one of the largest misclassification cases in its history and want Arise to pay back lost wages and liquidated damages to the workers, who were hired for gigs at major national brands, including Barnes & Noble, Comcast, Disney, and Walgreens.
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